Everybody wants to get the best deal.
In recent weeks I have had several discussions with my clients who own ecig retail and wholesale businesses regarding a particular challenge. Their vapor customers have begun to use their establishments as a ‘window shopping’ resource where they identify the devices they would like to have, then ultimately end up purchasing from somewhere else (usually online). Their high performance mod sales are down and uncertainty has begun to set in. Fortunately there are specific things which can be done to address this issue which can be effective for retailers as well as wholesalers.
Over the past few years I have had the opportunity to work with many vapor industry business owners across the country, some of which have created tremendously successful businesses and others which have struggled to keep their doors open. As the business development manager for a vapor hardware distribution company, I had the opportunity to collaborate with the owners of these businesses on a daily basis. In that role I began to notice some commonalities among the most successful of the bunch and now that I work with many of these same companies in a somewhat different capacity, the traits which the most successful owners have in common have begun to stand out.
One of these traits which relates particularly to declining high performance mod / hardware sales, is having the ability to identify market trends and adapt accordingly. In fact, I have found the most successful tend to be the ones who identify market trends which most vapor industry business owners would see as negative and are able to reframe these ideas in ways which are beneficial to their business. In recent weeks I have had several discussions with my vapor industry clients regarding decreases in high performance mod sales and felt this would be a good opportunity to offer some suggestions to those having the same experience. Before I get into that, it is important to consider the bigger picture of what is actually taking place.
High Performance Device Trends
I departed from the vapor hardware distribution business to develop FogPusher nearly one year ago. At that time the 70w iSticks were just coming to market and that was the most powerful device of its size available at that time. The industry has obviously been moving towards smaller, more powerful devices however, I’m not certain that even five years ago anybody could have predicted that 200w devices of that same size or that single 18650 devices which output over 100 watts would be available now. Improvements in battery and circuit technology have enabled the development of some of these tiny, powerful devices which are available today yet would have been considered hocus pocus only a few years ago. Since the technology required to develop these devices is still fairly new and the manufacturers who have access to it are still somewhat limited, the devices cost more. They are more expensive to manufacture.
Why is this important? Because every vapor customer, whether they are a seasoned vaping professionals or just getting started, want the best value they can afford when purchasing a new mod and the most valuable devices are expensive. Your customers, whether retailers or end-users, know there are online resources where they can find these products for less than what you can sell them for and likely close to what you can buy them for. In making a strictly dollar-for-dollar comparison it is impossible for you to compete. So is it time to pack up shop and find a new business? Not for most. Regardless of whether you are a retailer or wholesaler, you are not going to be the cheapest in the entire world. You CAN however, identify means of providing value in ways which justify your customer’s decision to purchase from you.
Additionally, consider what has happened in the computer business over the past 50 years. Computers which used to take up entire rooms have now been far surpassed in power, memory and everything else, by mobile phones and these devices cost a very small fraction of what they previously did. In
The Vapor Industry is Changing and You Must Adapt: Survival of the Fittest
For many of my clients in the vapor industry, mod sales seem to have taken a sudden dip – more so in recent months than ever before. Some of them own vape shops, wholesale operations and others have tobacco, cigar shops and even convenience stores which also carry hardware. Luckily, there are things you can do about the situation. First it is important to realize – and get very clear about – the fact that the industry is changing and now may be the right time to reconsider your business model and overall strategy, particularly in regard to high end mod sales.
Converting High Performance Mod Window Shoppers
Identify and clarify your value proposition.
What value can you offer to the customer that online vendors are unable to offer or that will be more convenient for the customer? Make sure this is clear when customers come in to look at higher end mods.
Do you offer in-store exchanges? Returns? Additional services outside of strictly selling them the hardware product? Assume that the customer is going to look up online prices immediately after leaving your store. If they are genuinely interested and do not buy it then, you can pretty much guarantee that they will anyway. Can you blame them though? If a retail customer is shopping a $100+ device and they can save $50 buying online and cannot justify the additional expense with anything they are aware you are offering, it probably doesn’t make sense for them NOT to take the time to find the better deal. Make sure your added-value is very clear when customers are shopping.
For wholesalers, the idea is basically the same. Shortly after I started working in the vapor hardware wholesale business I realized that my literal objective was to increase revenue but the most effective way to do that was to help my retail business customers grow their business. This was one of the strategies which I learned as a sales manager in the high end building material manufacturing industry which translated very nicely into the vapor industry. Once I made it a point to go out of my way to help my customers grow their business, the entire game changed. If you are in the vapor wholesale business, pay attention to the strategies your most successful customers are using and use your observation to help the retailers who need it. Your product might be hardware or juice but your real value is found in the resources you have available to you which you can use to help your customers grow their businesses.
If the situation is severe, make your profit on eLiquid instead.
This one might suck to think about but if your higher end mod sales have suddenly taken a 50% or more plunge, it may be time to start thinking about including eliquid with a full price purchase of your higher end mods. Make the same amount of profit but include something additional with the purchase.
Let’s say, if you are a retailer and have purchased devices which cost $65 each with shipping and you have them for sale for $110. $55 profit per device. You sell 30ml eLiquid bottles with a $15 profit per bottle. Maybe include 3-4 30ml bottles with the full price purchase. You’re likely saying to yourself, “I would rather not give away my mods at cost” and I certainly concur. However, if you are one of the businesses which is seeing their customers window shop then buy online, what is the alternative?
If your retail business has seen a tremendous drop in mod sales and you do not make a change to adapt to your customer’s online buying habits, you are going to get stuck with soon to be outdated devices and may not even get the eLiquid sale. This way you get both sales, make some profit and retain a customer who will likely recommend your business and keep coming back.
If you are in this situation and feel this might be the right solution for you, try it for a day and see what happens. Better yet, try it with a single customer. The great thing about all of this is that none of it has to be set in stone. See how it works and go from there. Chances are, as technology continues to improve and devices become more readily available manufacturer-direct, you will soon make the majority of your profit on eliquid sales anyway, if you are not already. It may be time to start preparing.
Find ways to get rid of any high performance mods which are even slightly outdated, ideally in ways that will help you sell more eliquid.
This is particularly important but if you have been fortunate enough to not get stuck with outdated devices then this article is likely not of much use to you anyway. Most retailers and wholesalers seem to have an inventory of mechanical mods they wish they could give away to make more room. If you have an abundance of devices which were big in 2014, it may be time to start looking at ways to use them to bring more traffic to your shop via social media contests, giveaways, etc…
I have seen the consequences of having an enormous inventory of outdated product in stock and it gave me a new perspective on ‘breaking even’ or taking a slight loss on these products (If you still have an abundance of Kanger Protank II’s and III’s or first generation mechanical mods in stock, you likely know exactly what I mean). There IS something worse than breaking even or taking a slight loss and it’s called never being able to sell your inventory, even if you started donating it.
If you can find ways to stimulate traffic or sell more juice using your outdated inventory, do it while you still can. If you don’t you may find yourself calling Salvation Army to inquire on vape hardware donation tax write-offs. I have actually never personally tried this but if you have, let me know how that worked out. I have literally researched everything from scrapping the materials used to make outdated products to offering them to customers for free. There are some things in this world which people do not want even if you give it to them for free. I advise against letting outdated inventory reach that point if you can avoid it.
Set up a game plan to check and re-check your eliquid and hardware suppliers. Make sure you are selling product that people want or even better, product they don’t know they want yet.
It might seem like a no brainer but you might also be surprised. The industry is full of innovation these days and whether you manufacture your own eliquid or resell other brands, you want to make sure you are going about it in the most effective manner possible, while providing your customers with the best value for their money.
Vapers are typically technologically inclined individuals and many of them spend their free time on forums or blogs discussing the latest in eliquid and mod technology. You definitely want to make sure you are offering the latest and greatest (within reasonable limits). It can be expensive and difficult to keep up with the latest mods but as long as you have a few really awesome products to choose from, this may not even be as important as the juice is. Make sure your juice is on point.
This article is not intended to present a doom and gloom situation but rather to offer means of going about solving issues which several of my customers seem to be experiencing. I have worked in the vapor industry for the last few years and many of my SEO / online marketing / web design clients consist of vape shop and wholesale owners. Since I work with businesses in the vapor industry from across the country, I also have many valuable contacts which may be of value to your business as well.
To learn more about what I can do for your business, please request a free digital marketing report or contact me and I am more than happy to talk with you about specific things we can do to increase traffic to your business and/or help it run more efficiently.